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In a recent article, Recent Trends in Bitcoin and Dollar,” I discussed CEO Jamie Dimon, of JP Morgan Chase. As discussed, Jamie Dimon belittled the cryptocurrency, calling it a fraud and saying that it would blow up. A recent article caught my eye in regards to JP Morgan’s dealings. The irony and hypocrisy of the financial services industry makes one foam at the mouth. It turns out that JP Morgan pulled a Goldman Sachs vampire squid move on everyone. Apparently, as Jamie Dimon was telling everyone that Bitcoin was a scam, the bank was buying it in Europe. Banks have a vested interest in containing blockchain technology and Bitcoin, but that doesn’t stop them from profiting on the upswing.

According to Zero Hedge, the bank was involved in trading Bitcoin XBT. Bitcoin XBT is an exchange-traded note designed to track the value of the cryptocurrency. JP Morgan employee Brian Marchiony stated “the bank does not take positions in the instrument with its own capital, and routes the orders electronically to exchanges.” He went on to say that these are customers purchasing 3rd-party products directly. Bitcoin XBT is being used by more than a dozen banks, including Morgan Stanley, Goldman Sachs, Credit Suisse, and JP Morgan. Supposedly, the banks as brokers for buying and selling the fund on Nasdaq’s Stockholm-based exchange, according to the Swedish online bank Nordnet AB. Even though Bitcoin is supposedly a total fraud and scam, the financial services industry is still quick to profit from it. JP Morgan, a criminal bank, would surely never sell something to clients that they were not betting against. Between Jamie’s jawboning and the Chinese shutting down exchanges, the price fell from $4,300 to $2,900. All I can say is thanks for the buying opportunity. If there is any tangible asset, you can bet the banks are trying to profit from it.

Last week, another prominent figure in the investment world said Bitcoin is in a bubble. Ray Dalio, founder of Bridgewater Associates, said Bitcoin is in a bubble and that gold is money. He repeated many of the same arguments that many in his position have said before. It’s not easy to spend and it’s not a store of value. Bitcoin is volatile, and people are speculating to make a quick buck. His points are valid. In a stable means of exchange, the price would need to not move so much, like with gold. If more money comes into Bitcoin and more governments adopt it, the less volatile Bitcoin becomes.  All I argue is that base money in the system is so saturated that people no longer want to hold a unit of debt. The trillions of dollars in circulation are forcing people to move from a fiat bubble to a stock and bond bubble. They know those markets are at exorbitant levels, so it’s forcing them into something that is not widely owned, such as precious metals and cryptos.

On that note, if cryptos are such a fraud, then why did Japan legalize it? With China putting the noose around the miners and the exchanges, I would expect Japan to mine Bitcoin at an increasing rate. For instance, GMO, a digital services firm, has announced plans for a cryptocurrency mine with $90 million behind it. GMO has spent $3 million in development of a new 7nm semiconductor chip to allow the energy-intensive process to add transactions more cheaply. The $90 million backing will include a data center built in northern Europe. Once developed, the goal of the first major Internet company is to allow people to mine. GMO President Masatoshi Kumagai said in a statement, “Besides mining at our company, we also plan to sell the mining board with the cloud mining center [so] that anyone can participate in mining.” If China continues its crackdown, the rest of the world will definitely pick up Bitcoin mining.

 

Cheers,

 

Colin Bennett

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